On September 5, 2018, Justice Bransten of the New York County Commercial Division issued a decision in Knox, LLC v. Lakian, 2018 NY Slip Op. 32191(U), granting an adverse inference against a party that asserted its Fifth Amendment rights, explaining:
Plaintiffs also ask this Court to draw a negative inference against Mr, Lakian. During Mr. Lakian’s deposition on January 7, 2016, he invoked the Fifth Amendment in response to every question posed by Plaintiffs’ counsel. Mr. Lakian invoked the Fifth Amendment in response to general questions, such as his current home address and whether he is familiar with Capital L. Likewise, Mr. Lakian invoked the Fifth Amendment in response to specific questions regarding Plaintiffs’ investments and the purposes for which Plaintiffs’ investment funds were used.
When a party in a civil action, capable of testifying on the issues, refuses to testify by the claim of privilege, he must thereupon bear all of the legitimate inferences flowing from the adverse evidence against him, and this without regard to his reasons for silence. The Fifth Amendment does not forbid adverse inferences where the privilege is claimed by a party to a civil cause. Here, it is clear that Mr. Lakian refused to answer any questions at his deposition not only because it would have incriminated him, but also because it would have been unfavorable to him in this action. Accordingly, Plaintiffs are entitled to a negative inference against Mr. Lakian regarding scienter.
(Internal quotations and citations omitted).
The assertion of the Fifth Amendment right against self-incrimination cannot be held against a defendant in a criminal trial. However, as this decision shows, such a refusal to testify in a civil lawsuit can be held against the witness. Contact Schlam Stone & Dolan partner John Lundin at email@example.com if you or a client have questions about asserting the Fifth Amendment right not to testify.
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